Republic of the Philippines

oFFTGE OF THE OMBUDSMAN (VISAYAS)

Deportment of Agriculture RO-7 Compound, M. Velez St., Guadalupe, 60A0 Cebu City

MAI\IIJEL P. MEJORADA,
Complainant,

-versus-
OMB-V-A-12-0091-B
JED PATRICK E. MABILOG,
City Mayor,
ATTY. JOSE JUNIO G. JACELA,
Chairman, Bids & Awards Committee,
ENGR. KARL QUIMSING,
BAC Vice Chairman,
, MR. NORLITO BAUTISTA,
MR. JESS SIO,
MR. AGUSTIN SANGRADOR, JR
MS. JOY ANN TOLEDO,
BAC Members
All of the Iloilo City Govemment,
Iloilo City,
ResPondents.
X---- --------X

POSITIONPAPER

COMES NOW COMPLAINANT by himself and to this Honorable Office most respectfully
submits this POSITION PAPER in compliance with its Order dated June 18, 2013 which he
received on July 16,2013.

FACTS OF THE CASE

Respondent Jed Patrick E. Mabilog was the City Mayor ofIloilo City for the term 2010'2013
and Head of the Procuring Entity (HOPE) who approved the award of a contract for Php
224,171,752.59 to the FF Cruz and Co./Ireyssinet Filipinas Co. Joint Venture for the
supplementary works on the Iloilo City Hall project by way of negotiated procurement under
Section 53.4 of the Revised Implementing Rules and Regulations of Republic Act No. 9184.

Respondents Jose Junio Jacela, Engr. Karl Quimsing, Norlito Bautista, Jess Sio, Agustin
Sagrador, Jr., and Joy Ann Toledo were Members of the Bids and Awards Committee (BAC)
constituted under Section 11 of Republic Act No. 9184. Respondent Jacela was the chairman
and respondent Quimsing was the vice chairman of the BAC.
, On May 24,2}Il,the respondents Jacela, Quimsing, Bautista, Sio, Sangrador and Toledo, in
their capacity as Chairrnan, Vice Chairman and Members of the BAC, adopted BAC
Resolution No. 11-05-046-Q entitled "A Resolution Justiffing and Recommending for
Approval of Negotiated Procurement as a Mode of Procurement for the Works of the Updated
Plans for the New Iloilo City Hall Building as the I't Eco Friendly 'Green' Building Bid No.
0051";l

fn sum, the BAC justified the resort to a Negotiated Procurement as the mode for the award of
the contract on the ground that "the scopes of work (have) actual and physical contact with
and closely connected to the original contract" and deemed it as complying with the
requirements set forth in Section 53.4 of the RIRR, RA 9184.2In one of the'o'Whereas"
clauses contained in the aforesaid BAC Resolution, respondents stated that'Negotiated
Procurement, as an alternative method of procurement, shall promote economy and efficiency
and that the most advantageous price for the government shall be obtained."

Respondent Mabilog approved the recommendation of the BAC as shown by his signature on
the last page of the BAC Resolution No. 11-05-046-Q. Subsequently, respondent Mabilog
signed the contact with F.F. Cruz and Co.lFreyssinet Filipinas, Inc. Joint Venture. The
implementation of the supplementary contract was ca:ried out, and the City Government
occupied the building sometime in December 2011.

In an Audit Observation Memorandum dated December 12,2A113, the Commission on Audit

made the following comments:

1. "The Contract - Supplemental Agreement No. 1 covering the construction of the

Updated Plans of the New Iloilo City Hall Building did not mention the mode of
procurement that was opted to by the Iloilo City Govemment.
2. "No document was submifted to show that a public bidding was conducted on the
supplemental works, considering the materiality of the cost, neither was there a BAC
Resolution on the altemative mode of procurement resorted to by the City
Government.
3. "There was no proof that the Notice of Award for the Supplemental Works was posted
in the PHILGEPS website.
4. "The payment to the contractor of the 15% mobilization expenses for the supplemental
works was contrary to COA Ctt.82-177 dated March A4, L982, since mobilization had
already been paid to the same contractor. The stated Circular provides that the advance
payment covers the cost of mobilizing equipment to the job site. Considering that this

t
Annex "3" of the Counter-affidavit of Respondent Jose Junio Jacela.
2
"Section 53,4 - Adjacent or Contiguous. Where the subject contract is adjacent or contiguous to
an on-going lnfrastructure Project or Consulting Service where the consultants have
unique experience and expertise to deliver the required service: Provided, however,
That (a) the original contract is the result of a Competitive Bidding; (b) the subject
contract to be negotiated has similar or related scopes of work; (c) it is within the
contracting capacity ofthe contractor/consultant; (d) the contractor/consultant uses
the same prices or lower unit prices as in the original contract less mobilization cosU
(e) the amount involved does not exceed the amount of the ongoing project; and (f)
, the contractor/consultant has no negative slippage/delay: Provided, further, That
negotiations for the procurement are commenced before the expiry of the original
contract"
o6"
' Annex of the Counter-affidavit of respondent Jose Junio Jacela.
 is a supplemental agreement and the scope of works do not require heavy equipment,
the payment of the additional l5Yo for mobilization is unnecessary-
5. "The submission of the subject Contract to this Office was not compliant to COA Cir.
2009-001 dated February 12,2009. Audited agencies should furnish the auditor with
copies of perfected contracts within 5 working days upon apptoval together with the
supporting documents forreview. While the contract was perfected on July 22,2011,
the same was submitted to COA only on August 22,2011.-

The same COA-AOM added that the "observations were brougtrt to the attention of LGU
management on October 05,2011 thru a Memorandum dated October A3,2011. However, no
reply or managoment comment was received to date."

It is noteworlhy to mention that these same audit observations were reiterated in tlre Annual
Audit Report of the COA for Iloilo City for the year 2011. A copy of this report could be
viewed on the COA website www.coa.gov.ph/audit/AARhtm.

ISSUES

1. Did respondents, conspiring and confederating with each other, violate Republic Act
No. 91844 when they awarded the supplementary contract involving the amount of
Php 224,171,752.59 for the construction of the Iloilo City Hall Building without a
competitive public bidding?
2. Did the respondents, as a direct consequence of their actions in the perfonnance of
their offrcial functions, cause undue injury to the Government in entering into a
contract grossly disadvantageous to t}re same with evident bad faith, violate Section 3,
(3) of Republic ActNo. 3019?

DISCUSSION AI\ID ARGT]MENT

THE AWARD OF THE CONTRACT WITHOUT UNDERGOING A COMPETITIVE

PUBLIC BIDDING WAS ILLEGAL

At issue in this case is whether or not the scopes of work covered by the supplementary
contract for Php 224,171,752.59 between the Iloilo City Government and F.F. Cruz and
Co.ffreyssinet Filipinas Co. Joint Venture for the construction of the New Iloilo City Hall
Building fall under the definition of "Adjacent and contiguous" provided for under Section
53.4 of the Revised Implementing Rules and Regulations of RA 9184.

Section 10 of RA 9184 provides that all procurement shall be done through competitive
public bidding except for situations provided for under Article XVI. The rationale behind the
requirement of a public bidding, as a mode of awarding govemment contaots, is to ensure
that the people get maximum beuefits and quality serviees fromthe.eontraetsr$rIorc

o
'Section 10. Competitive Bidding.- All Procurement shall be done through Competitive Bidding, except as
provided for in Article XVI of this A€1."
significantly, the strict compliance with the requirements of a public bidding echoes the call
for transparency in government transactions and accountability of public offrcers. Public
biddings are intended to minimize occasions for comrption and temptations to abuse of
discretion on the part of government authorities in awarding contracts.)

Competitive public bidding may not be dispensed with nor circumvented, and altemative
modes of procurement for public service contracts and for supplies, materials, and equipment
may only be resorted to in the instances provided for by law.6

Section 53.4 of the Revised Implementing Rules and Regulations is one of the exceptions
from the rule on public bidding under the Government Procurement Reform Act, and it sets
the following conditions for the same to be allowed:

a) The original contact is the result of a Competitive Bidding;

b) The subject contract to be negotiated has similar or related scopes of work;
c) it is within the contracting capacity of the contractor/consultant;
d) The contractor/consultant uses the same prices or lower unit prices as in the original
contract less mobilization cost;
e) The amount involved does not exceed the amount of the ongoing project; and
0 The contractor/consultant has no negative slippage/delay.

In the case at bar, the scopes of work for the contract that was negotiated did not meet the
condition ("b") that it must involye "similar or related scopes ofwork". (Italics supplied.)
This phrase has a strict and technical meaning. By "similar or related", the law contemplates
scopes of work that can be compared in terms of unit cost and the work involved. It must be
viewed with letter "d", that "the contractor/consultant uses the same prices or lower unit
prices as in the originnl contract less mobilization cosf'(italics supplied). of the conditions
under Section 53.4 in mind. It is comparing apples with apples.

The original contract involved primarily civil works as the scope of works. The
supplementary contract involved mechanical, electrical, sanitary, data management,
architectural works, fire fighting and others. Hence, there can be no basis for comparison in
the unit costs for the scopes of work. Without such basis for comparison of the unit prices, the
Government was left vulnerable to price manipulation, and padded costs.

Respondents distorted the meaning of the law when they justified the scopes of work as being
"having actual physical co '.7
(Underscoring supplied) The respondents attempt to redefine the conditions set forth under
Section 53.4 of the Rm.& RA 9184 in an effort to cover-up the offense. This exception to the
rule must be strictly construed and all the conditions must be present for a negotiated
procurement to be tenable. Absent one condition, and the contract must undergo public
bidding. In this case, it's not just one, but two, conditions that are absent.

Under the circumstances, the conftact was not eligible for award through negotiated
procurement. It should have been subjected to a competitive public bidding, especially
because it involved a huge sum of money.

u
Gana vs. Olongapo Maintenance, etc., G.R. Nos, 146184-85, G.R. No. 161117, G.R. No. !67827,January 31,
2008.
t
tbid.
7
Paragraph 3.3 of the Counter-affidavit of respondent Jed Patrick Mabilog and paragraph 3, Page 2, of the
Counter -affidavit of respondent Jose Junio Jacela.
 *The requirements of the law on government procurements
As the Supreme Court held,
grave consequences await those who violate
should never be taken for granted because
them."8

TIIEG0VERNMENTSUT.TEREDI]NDTIEINJURYBECAUSETImCoNTRACT AS
TO TIIE GOVERNMENT
ENTERED INTO IS GROSSLY DISADVANTAGEOUS
A CONSEQTIENCE OF EVIDENT BAD FAITH OF RESPONDENTS'
punishes the act of public officials or
section 3, paragraph (e) of Republic ActNo. 3019
.ocausing any undue rniury to any party, including the Government' or
employeesfor
or preference in the discharge of
grving any private plrty any unwarranted benefits, advantage
manifest partiality, evident bad faith
his official, administrative or judiciat flrnctions through
shall apply to officers and employees of
or gross inexcusable negligence. This provision
grant of licenses or permits or other
offices or govenrment corporations charged with the
concessions." (Emphasis supplied')
procurement
Entrty GIopE) defined under section 5 fi)
Respondent Mabilog was the Head of
such that he approved the
of RA 9184 and it was in the performance of his duties as
composed of respondents Jacela"
recommendation of the Bids and Awards Commiuee
of the Iloilo city
Quimsing,Bautista, sio and Toledo. He signed the conttact in behatf
Filipinas Inc. Joint Venture'
Government with the contractor, F. F. Cruz and Co.lFreyssinet

The respondent members of the BAC adopted BAC Resolution

No. I 1-05-046-Q to justiff
mode of procurement for
and recomrnend to respondent Mabilog to resort to the negotiated
12, RA 9184'
this contract in the performance of their duties mandated by Section
procurement to award
By conspiring and confederating to resort to the negotiated mode of
respondents
this contract to F.F. Cruz and Co.lFreyssinet Filipinas, [nc. Joint Venture,
and as a result,
manifested partiality, evident bad faith or gross inexcusable negligence,
factual basis to determine the
caused undue injury to the government. There was no legal and
reasonableness of the prices in the contract because there is nothing
in the originat contract
the Government
with which the unit costs can be compared with. Undue injury was caused
because the project could have been undertaken at a much lower cost'e

Instead of ensuring that the project was pursued with cost-efiEciency and avoidance
of
conspired to jack
wastefirlness in the expenditure of public funds in mind, respondents clearly
up the costs to the disadvantage and rqiury to the Government. Bad faith is evident
and
issue about the
manifest because prior to the BAC's adoption of its resolution aforestated, the
mode of procurement was discussed extensively overthe local media. In fact, complainant
and
had written two blog articles, entitled "Revisions and change orders" and "Adjacent
contiguous", onhis Wordpress.com blog "Mejorada's Point of Vieu/'with URL
www.manuelboymejorada.wordpress.com on May 12,2011 and May 17,20ll respectively.
o'Revisions and change orders" as Annex'oA" and "Adjacent and
Attached are print-outs of
contiguous" as Annex "B" of this Position Paper.

I Rolando Sison vs. People, G.R. Nos. 170339, 170398-403 : March 9, 2010'
25, 2009'
'Felicitas Ong vs. People, G.R. No. !76546, September
Respondents ignored the warnings ventilated in the media that they would be violating the
law if they proceeded to adopt the Negotiated Procurement as mode of procurement for this
contact. They committed the offense fi.rlly conscious of the ramifications involved.

From an original estimate of Php 455 millionlo which was fxed as the approved agency
estimate when the project was advertised for public bidding in November 2009, the project
cost ballooned to an estimated Php 610 million by the time it was finished. This figure was
arived at by adding the originat contract price of Php 386 million and the supplemental
contract of Php 224 million The change orders are not included.

The final construction cost of the New Iloilo City Hall Building overshot the original budget
by Php 155 million, largely because of the machinations of respondents.

Clearly, such an end-result is not consistent with the avowed purpose for which the resort to a
negotiated procurement was adopted by the respondent BAC members in stating that it was
done to promote "economy and efficiency''.

This leads a reasonable mind to conclude that there was a high-level conspiracy to skim
public firnds from the treasury of the Iloilo City Government by padding the unit costs of the
scopes of work and avoiding a aompetitive public bidding to make sure the crime is not
exposed. All that one needs to do is look at the final cost figures to establish the existenee of a
conspiracy. There is not even a need to present direct evidence to prove conspiracy.ll

The Supreme Court has stated that the essential elements of this crime are: (1) the accused are
public officers or private persons charged in conspiracy with them; (2) said public officers
commit the prohibited acts during the performance oftheir official duties or in relation to their
public position; (3) they caused undue injury to any party, whether the government or a
private party; (4) such injury is caused by giving unwarranted benefits, advantage or
preference to such parties; and (5) the public officers have acted with manifest
partiality, evident bad faith or gross inexcusable negligence.l2

All the above elements are present in the commission of this offense.

In addition to the above, the Audit Observation Memorandum (AOM) of the Commission on
Audit dated December 12,2011 uncovered the fact that respondents caused undue injury to
the Government when they authorized, and disbursed, a l1%a mobilization expenses to the
contractor. Paragraph "d" of Section 53.4 of the Revised Implementing Rules and Regulations
explicitly states that the contract price should deduct the l1Yo mobilization cost. As correctly
pointed out by COA, there is no need to mobilize heavy equipment because ofthe nature of
the scopes of work. This gave F.F. Cruz and Co.lFreyssinet Filipinas, Inc. Joint Venture
unwarranted benefits.

Finally respondent Mabilog could not escape culpability and blame the anomaly on the BAC.
As local chief executive, he should have been the first to follow the law and see to it that it
was followed by his constituency. Sadly, however, he was the first to break it.l3

'o Annex "D" of Complainant's Affidavit.

" Alvizo v. Sandiganbayan, G.R. Nos. 98494-98692,17 July 20O3, 405 SCRA 3LL,374-375.
t'Dugayon
v. People, G.R. No. 747gg3,August L2,2N4,436 SCRA 262,272.
13
Rolando Sison vs. People, G.R. Nos. 170339, 170398403 : March 9, 2010.
 PRAYER

this position paper be

ryHEREFORE, premises considered, it is most respectfully prayed that
Honorable Office to
included in the records of the herein case, and after evaluation, for this
render a finding of gurlty against respondents'

premises'
Complainant prays for other reliefs just and equitable under the

RESPECTFULLY SUBMITTED

Iloilo City for Cebu City, Philippines, July E-,2013'

Complainant

VERIFICATION

I, MANUEL p. MEJORADA, of legal age, married, Filipino citizen and with address at No.
2 Kasoy St., Villa San Lorenzo Subd., Lapaz,Iloilo City, Philippines, after having been
duly
sworn to in accordance with law hereby depose and state:

That I am the Complainant in the above-entitled case; that I caused the foregoing Position
paper to be prepared; that I have read and understood the same and that a1l the allegations
stated therein are true and correct of my own knowledge and information and based on
authentic documents in my possession;

IN WITI{ESS WHEREOF, I have hereunto set my hand this -K t day of July ,2013 at
Iloilo City, Philippines.

\ur\^
nfr.flnma
rvry'nnrei,Yp.
;;;;;";i&-flr" same in my presence and affirned rmder oath to the correetness of the
contents or allegations of the sarne-
his Philippine Passport No. EB
The affiant is personally known to rne and he exhibited to me
306461s issued on July 16,2a1ll in Iloilo City, Philippines'

ATTY" GEOP6

REG, N0. 40 tit\i'il1 DECEMBEp 31, 201+

SUITE .1, LEVFL 3, IRISTII}A TOLOiJIJADE ELD6.
RI ZAL. HUEFU,(I]A STREE]S, T A}'* Z, I I.OiI- O CI T Y
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Series of 2013.